Author Topic: Car Advice Please!  (Read 4214 times)

GiantTaco

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Car Advice Please!
« on: April 11, 2014, 10:35:38 AM »
Hi all. I had great results in my last question thread, so I'm back!

I'm just about 22, and I'm currently driving a 2011 GTI; I made the stupid mistake of asking for it at age 19, and my dad made the stupid (and generous) mistake of accepting. I really love the car, but it hasn't been the best use of our money. The lease is up at the end of May. The original plan was to purchase it at that point, he continues paying until I'm working and stable, and then I take it over. His financial situation took a turn for the worse, so we're considering having me be the sole purchaser and pay for it myself which will be a bit painful until I start fully working in January (graduating in December). There's the option of doing joint again, I don't know whether there would be a benefit there, maybe reduced financing rates?

Instead of writing too much, here's what I think are my current options:
1. Purchase the car after lease, financing it. This will be a little painful this year since I'm not going to be making high income, but doable. I'd keep my awesome car that would provide me with shallow fulfillment :P
2. Same as #1, except sell it private party and use that money to pay off loan. I spoke to an old friend today, and he's a potential buyer; I can likely get a buyer for this car in any case, especially since it's in great condition; certainly over the residual contract amount, so I stand to make some money.
3. Return the lease and eat fees.

Part 2, replacement car:
1. Buy used from same dealer as lease. I don't know if they will make any kind of deal since I'm giving them more business; maybe/maybe not waive lease return fees?
2. Buy used from any dealer.
3. Buy private party.

For the replacement car, I don't have enough cash right now to outright buy a car, so I'd need to get some sort of financing. I don't know whether people take out loans on their own, or rely on dealer provided loans, or what.

Some extra details:
- I've barely driven this year, so I'm probably ending the lease at 30k miles or so.
- The residual on the contract is ~$14,300 I believe.
- I poked around a bit, and right now I could probably get $17-17.5k for it private if I'm lucky. I believe a new model is coming out at the end of May, so prices may drop.
- Gas is probably $90/mo, insurance $170/mo.


Phew, that was a lot. If you made it this far, you're awesome :) I appreciate any input on this matter. Other options I may have missed, etc.

Thanks in advance!

EDIT: More in the second reply.
« Last Edit: April 11, 2014, 11:58:27 AM by GiantTaco »

Forcus

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Re: Car Advice Please!
« Reply #1 on: April 11, 2014, 11:21:14 AM »
I'm not super knowledgable about leasing, are you saying that you can buy it at the end for $14.3k and not have to pay tax / title / license? Doesn't sound that bad. I will not say it's mustachian but here are my general thoughts:

- You love the car. That's great. I don't think I've ever loved a car. I've had 74 of them (yes I have a spreadsheet to keep it straight). I'm still looking for my true love on wheels. That trade-up/down/even wisdom of mine has cost me a ton of money, straightening out problems from previous owners, etc. So, what I'm getting at is that even if not strictly mustachian (or even close to it), I am a fan of the known quantity, and in this case, since you got it new, you know what you have.

- In terms of MPG, repair costs, etc., what you have is on the more frugal side of the automotive spectrum.

- BUT, Re-reading your story, it looks like your dad is in a worsening financial situation, you are in school and don't have a job (as in career) lined up yet. That is kind of a burden especially if you have any student loans. You would already be behind the 8-ball on monthly payments. The car may not "make you happy enough" to make up for this. I assume too that once you graduate you would be looking for a place, so that's more payment per month.

- I'd consider downgrading. Just this past week on my local CL, there was a 2007 Jetta 2.5L / manual with 93k miles for $7k best offer, and a 2009 Jetta 2.5L / manual (loaded) with 76k miles for $8k. Something like this might give you 80% of the driving experience with half the cost and lower insurance to boot.

Just some thoughts. I'm a little jealous, I'm 32 and driving a 13 year old Focus but at the same time zero payment and near zero maintenance, no worries about dents, dings, so still only a little jealous.

GiantTaco

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Re: Car Advice Please!
« Reply #2 on: April 11, 2014, 11:58:04 AM »
Thanks Forcus, seeing that it may not be a bad deal regarding the car at least puts me at ease.

I should add some detail to my situation. I'm living at home with my mom, overall my monthly expenses are fairly low. I'm in software development, so even my internship will bring in decent money. I'm pretty much guaranteed a well-paying job in January, and I'll continue to live at home at least until summer 2015, when I'll have stabilized financially.  So I can certainly afford the car; that's the main pain point, trying to decide on the tradeoff.

As for lease details... from what I've read, the amount I'm responsible for at the end is the lease is the residual value assigned from the start, which actually is $14,400; I'd have to finance it completely separately as a used car. But I agree with you that it's a solid deal; fuel efficiency is solid for the type of car, repair costs are nonexistent, maintenance is minimal. And the car is going for a few thousand above that right now - that's actually a good opportunity to make some money on a potential sale.

I drove a 2014 1.8T Jetta in January, and it felt like crap. Granted it was automatic, since I'm sadly not practiced with manual (I know, I know...), but even in the sportronic or whatever they call it, it made me appreciate my car even more. The thing is, I only drive to commute to work/school and back (which I haven't done at all this semester, it'll really only get use starting in about 5 weeks), so it's not like I'm getting tons of use either. That's probably the main reason I'm even considering downgrading.

I'm hoping to get some extra input, like yours, from this thread for a different financial perspective. I may decide to keep it and enjoy it.

ketchup

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Re: Car Advice Please!
« Reply #3 on: April 11, 2014, 12:04:02 PM »
It looks like you're not really in a position where that car makes sense, even though I'm sure you wish you were.

I've heard it can be more fun to drive a slow car fast than a fast car slow, but I don't have enough experience driving fast cars to say what I think about that.

I would second Forcus' suggestion to trade "down".  The concept of getting 80% for less than 50% is by far the way to go.  You could even go cheaper, since you said you aren't exactly swimming in cash.  If you could clear $3k from buying-and-selling (make sure you do your homework there and don't get screwed by BS dealer fees that cut down your profit; if it seems shaky just eat the fees and bail.  I've never looked into leasing a car, but I know there are gotchas), there are plenty of fun cars out there for just a few grand.  There are also more practical and less fun ones of course, but I'm just trying to point out that cheap car and fun car don't have to be mutually exclusive.

Of course, that potentially gets you into be-your-own-mechanic territory, which is not necessarily a bad thing.  That builds Super Useful Life Skills that pay huge dividends all around.  In any case, if you did go that route though, I'd steer clear of 90s VWs.  They tend to be a headache; my roommates' '95 GTI is pretty annoying to fix when things go wrong, and I've heard plenty of other things about them.  If you want an example of a cheap fun car, look up the early 90s Suzuki Swift GT.  They get 40MPG (maybe 35 if driven constantly like a bat out of hell, probably could clear 45 hypermiling) and a more-than-healthy dose of get-up-and-go.  It can be modified to be totally ridiculous too, if that's your thing.

That insurance seems really pricey to me.  My girlfriend's sister (23) has a 6 month old car and is paying something like $90/mo.  You might want to look into that.

Another thing to think about is how much you will need this car (miles/year), and what it will be used for.  If you don't know, that's a good reason to wait until you do to make your decision.

Wait, it's an automatic?  VW makes automatic GTIs now?

GiantTaco

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Re: Car Advice Please!
« Reply #4 on: April 11, 2014, 12:29:01 PM »
That insurance seems really pricey to me.  My girlfriend's sister (23) has a 6 month old car and is paying something like $90/mo.  You might want to look into that.

Another thing to think about is how much you will need this car (miles/year), and what it will be used for.  If you don't know, that's a good reason to wait until you do to make your decision.

Wait, it's an automatic?  VW makes automatic GTIs now?

Thanks, ketchup. You are delicious and insightful.

I don't know what to say about insurance. We're on American Family; the house and my mom's car are on there so we get discounts, I think they're giving me the "good student" one too.
Does she have full coverage? Leases need it; could probably drop it down significantly with some policy changes.

I don't imagine high annual mileage. 7-8k maybe. That will hopefully go down even more whenever I decide to move. That probably makes owning an upscale car even worse.

They've been putting dual-clutch "automated manual" transmissions for a while, starting with MK5 I think. It's really quite an awesome piece of engineering; surprisingly good for $26k. I would have gone manual, but I didn't want to practice on a brand new car :(

jpo

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Re: Car Advice Please!
« Reply #5 on: April 11, 2014, 12:46:26 PM »
I should add some detail to my situation. I'm living at home with my mom, overall my monthly expenses are fairly low. I'm in software development, so even my internship will bring in decent money. I'm pretty much guaranteed a well-paying job in January
I would not count on that.

ketchup

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Re: Car Advice Please!
« Reply #6 on: April 11, 2014, 01:51:41 PM »
I don't know what to say about insurance. We're on American Family; the house and my mom's car are on there so we get discounts, I think they're giving me the "good student" one too.
Does she have full coverage? Leases need it; could probably drop it down significantly with some policy changes.

I don't imagine high annual mileage. 7-8k maybe. That will hopefully go down even more whenever I decide to move. That probably makes owning an upscale car even worse.

They've been putting dual-clutch "automated manual" transmissions for a while, starting with MK5 I think. It's really quite an awesome piece of engineering; surprisingly good for $26k. I would have gone manual, but I didn't want to practice on a brand new car :(
I assume she does have full coverage; she has financing through the Toyota dealership.  Insurance does vary based on location though.  We live in the western Chicago suburbs and I know for a fact that insurance is almost double in Phoenix.  Your low annual mileage should lower your rate too.

I've heard some scary things about the longevity of the dual-clutch transmissions, but I think those were from Ford.  I've been leery of new tech in that department since my mom's CVT blew up under 100k.

ritchie70

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Re: Car Advice Please!
« Reply #7 on: April 11, 2014, 02:10:47 PM »
- I'd consider downgrading. Just this past week on my local CL, there was a 2007 Jetta 2.5L / manual with 93k miles for $7k best offer, and a 2009 Jetta 2.5L / manual (loaded) with 76k miles for $8k. Something like this might give you 80% of the driving experience with half the cost and lower insurance to boot.

Just a note here, if you're used to the 2.0T, the 2.5 will feel very slow. I had an '02 GTI with the 1.8T and currently drive an '08 with the 2.0T and somewhere in there I had a rental that was a 2.5L Beetle.

Both actually had automatics, because I haven't driven a manual transmission on the roads in quite a long while and I don't want to own a car my wife can't drive. The 02 was a "standard" automatic transmission, but the '08 has the DSG, which has gears and two clutches. You can shift it like a manual transmission without a clutch pedal or you can let it shift itself.

Do you know about the "launch mode"? I know my '08 has it, not sure if your '10 would. In drive, stopped, foot on brake, turn off traction control, then shift to "S". You should be able to freely rev the engine at this point. If it's pulling against the brake, something went wrong or your car doesn't have it. Rev it to the mid-to-low 2K, release the brake and enjoy the tire squealing as you take off like a bat out of hell.

CarDude

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Re: Car Advice Please!
« Reply #8 on: April 11, 2014, 03:38:23 PM »
I'm going to be the square guy who says your first mistake was buying a VW, presuming you're not interested in having a dozen strange things go wrong with your car every year. Second of all, a big reason your insurance is high is because you're a high risk driver in a high risk vehicle. Twenty two year old males are more apt to do stupid things like speed, drive drunk, and drive without seat belts. Put them in "sporty" cars and they're that much more likely to do those things.

If you want to reduce your rates, get into a vehicle that doesn't suggest you're going to do those things. If your car makes you excited because you see it as a high performance vehicle, you should be aware that from a statistical perspective, you're seen as a "highly likely to hurt yourself or others" driver.

Thegoblinchief

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Re: Car Advice Please!
« Reply #9 on: April 11, 2014, 04:41:33 PM »
I'm going to be the square guy who says your first mistake was buying a VW, presuming you're not interested in having a dozen strange things go wrong with your car every year. Second of all, a big reason your insurance is high is because you're a high risk driver in a high risk vehicle. Twenty two year old males are more apt to do stupid things like speed, drive drunk, and drive without seat belts. Put them in "sporty" cars and they're that much more likely to do those things.

If you want to reduce your rates, get into a vehicle that doesn't suggest you're going to do those things. If your car makes you excited because you see it as a high performance vehicle, you should be aware that from a statistical perspective, you're seen as a "highly likely to hurt yourself or others" driver.

I'd walk away from the VW.

Forcus

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Re: Car Advice Please!
« Reply #10 on: April 14, 2014, 09:54:31 AM »
I'm going to be the square guy who says your first mistake was buying a VW, presuming you're not interested in having a dozen strange things go wrong with your car every year.

I don't have any recent experience but I think the 90's and very early 00's were pretty bad about this but the newer stuff is pretty solid. Then again the newer stuff hasn't aged yet so who knows. The wife had a crappy '98 bug and I loved how it drove. Even with 115 HP it felt much more powerful because the gearing matched the 2.0's torque curve. Even with well-worn suspension, drove circles around most other cars of the era I've driven. But it did have quirks, the headlight circuit (which I fixed with additional grounds), random misfires, a radio you had to unlock with a code if you had to change a battery (really, who is going to steal a tape deck from a Bug??), peeling soft-touch paint on plastic surfaces, etc. 80's VW's have their issues but they are reasonably scienced out so you just know going in that you are going to have to replace door handles, etc. every year. I am not a VW fan boi but I would consider a newer one and not worry too much (maybe I'm naive).